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FDI and the skill premium in a North-South global economy

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  • Subhadip Ghosh

Abstract

The effect of FDI from North to South countries on the skill premium of both groups of countries is examined. The lower wage of unskilled labor in the South induces the Northern firms to shift the unskilled labor intensive production processes in the South. FDI occurs in an unskilled labor intensive activity, but in a skill-intensive sector. It is shown that this leads to an increase in the skill premium of skilled labor in both North and South.

Suggested Citation

  • Subhadip Ghosh, 2008. "FDI and the skill premium in a North-South global economy," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 17(2), pages 181-195.
    • Handle: RePEc:taf:jitecd:v:17:y:2008:i:2:p:181-195
    DOI: 10.1080/09638190701872566
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    References listed on IDEAS

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    Cited by:

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    4. Sugandha Huria & Manoj Pant, 2018. "Foreign direct investment, welfare and wage inequality in a small open economy: theory and empirics," Indian Economic Review, Springer, vol. 53(1), pages 131-166, December.

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